International Finance Quiz Questions including:
1. Different components of Current and Capital Account a. Understand the definitions of different BOP accounts b. Some examples of international transactions would be given and you should be able to categorize them into different accounts
2. Effect of BOP surplus and deficit on future exchange rate movements
a. How BOP surplus affects exchange rate appreciation or depreciation
b. How BOP deficit affects exchange rate appreciation or depreciation
3. Implications of the J-Curve Effect
4. How different factors affect International Trade Flows?
5. Suppose Bid and Ask Rates (for example, in the form $/£ or £/$) are given, calculate:
a. How many $ a firm would receive by selling certain amount of £
b. How many £ firm would receive by selling certain amount of $
c. How many $ a firm needs to pay to buy certain amount of £
d. How many £ a firm needs to pay to buy certain amount of $
e. Compute the Bid-Ask Spread
6. Pricing of ADR
7. If old and new exchange rates (for example, in the form $/£ or £/$) are given, calculate
a. Appreciation/Depreciation in $.
b. Appreciation/Depreciation in £.
8. Lending and Borrowing rates for two currencies are given; Also, current spot rate and expected spot rate are given
a. In which currency a bank should borrow for speculation?
b. In which currency a bank should lend for speculation?
c. What the total interest a bank would pay on its borrowing?
d. What is the total interest a bank would earn on its investment?
e. What is the speculative gain?